Bob Armstrong
03-01-2010, 09:53 PM
This month in Ontario, the election of 2010-11 CFC Governors starts in the Ontario Regional Leagues - March for the South-Western Ontario Chess League, and April for the Greater Toronto Chess League. I assume that these elections across the country will be taking place over the next three months.
The Governor plays a key role in the CFC. Below is an article I wrote on March 16, 2009 , which is still relevant, that speaks to these elections ( some recent editing has been done to correct a few errors ):
The Important Role of the Governor in the CFC ( Part I )
By Bob Armstrong, CFC Life Member –
Provincial AGM’s & Governors
Each year, usually in mid-Spring, Provinces hold their Annual General Meeting ( AGM ). Members of the CFC have the opportunity at this meeting to elect their governors for the CFC. Is this important to CFC members? Should they come out and vote? Let’s take a look at what role the CFC Governors play, and whether CFC members should be concerned about these upcoming elections.
The Nature of CFC Governors
A pro-bono CFC lawyer stated some time ago, that the Governors ( called “ Special Members “ in the Bylaws ) are similar to corporate shareholders, and not liable for their actions. He stated:
“As a practicing lawyer I can advise that the CFC is a corporation and as such is a separate legal entity. Shareholders of a corporation are not liable for the misdeeds of a corporation. At the annual meeting Governors - who are the equivalent of shareholders- elect an executive to manage the affairs of the corporation in the same way that business corporations elect a board of directors. In the CFC's case the executive are the directors and are registered as such with the appropriate government authority in the same way that a business corporation registers its board of directors with the appropriate government authority. The directors (i.e. the executive in the case of the CFC) of a corporation are occasionally, though not usually, liable unless the acts that they do are themselves unlawful. The directors are not usually personally liable if the corporation takes some action which causes problems or losses to another individual. The corporation may in some circumstances be liable but not the directors personally. This is one of the main reasons why people incorporate. The situation is entirely different with a group of individuals who are not incorporated as is often the case with community groups. “
Differences Of Governors From Shareholders
I, however, see significant differences between the " Special Members = Governors " of the non-profit CFC corporation, and " shareholders " in a normal corporation. Shareholders do not " govern " a corporation. They elect a Board of Directors to govern the corporation for them, and the Board elects an Executive to carry out the day to day running of the enterprise, and to bring matters of governance back to them for their voting decision.
That is not the case in the CFC. Yes the Governors are members of the non-profit, but they are " Special Members ", representing the members in the provinces/territories. And the Bylaws give them powers you don't see being given to shareholders. For example, take Section 1 of CFC Bylaw # 2:
” BY-LAW NUMBER TWO OF THE CHESS FEDERATION OF CANADA
1. ASSEMBLY OF GOVERNORS
The Chess Federation of Canada shall be governed ( my emphasis ) by an Assembly of Governors (hereinafter called the Assembly )... “
This is further emphasized in Section 7:
” 7. POWERS OF THE ASSEMBLY OF GOVERNORS
The Assembly shall have plenary powers ( my emphasis )to exercise in the name of the Federation all powers that the Federation has accorded to it ( my emphasis ) by its Constitution and the Canada Corporations Act (Part II). “
In fact certain critical powers are reserved exclusively to the Governors -
” 8. MATTERS RESERVED EXCLUSIVELY TO THE ASSEMBLY OF GOVERNORS
Final decisions in the following matters are reserved exclusively ( my emphasis ) to the Assembly.
the formal recognition as an affiliate of any provincial association or interim provincial association in Canada,
the appointment of an honourary patron and one or more presidents emeriti from time to time,
the determination of the amount of fees for any class of membership as provided in these by-laws,
the amending in any degree of the Constitution and By-Laws of the Federation,
the election or removal of a Director(s) or Officer(s), unless otherwise provided for in the by-laws,
the changing of the titles, duties and responsibilities of the directors and officers,
the spending, transferring or otherwise disposing of a significant portion of the Federation’s assets,
the appointment or removal of an auditor or auditors. “
The CFC “ Board of Directors “
Furthermore, the Board of Directors of the CFC ( = the Executive ) is the creature of the Governors. It is elected by the Governors. Its powers come from the Governors. And it does not “ govern “ the corporation as a Board of Directors does in a regular corporation. It is more like the Assembly of Governors’ Executive Committee. See Section 9 -
” 9. DELEGATION OF POWERS
The Assembly may delegate any of its powers to the Board of Directors, or to the President or other person or persons. Where a power is delegated to the Board of Directors the Board may in turn delegate such power to the President or other member of the Board of Directors and such delegation shall be deemed to have been made by the Assembly. “
It is my understanding that the Governors have only delegated to the Board of Directors the day-to-day operations of the CFC, and not all powers. Policy decisions and major operating decisions that are urgent, where there is no time to convene ( however ) the Governors to vote, are also delegated to the Executive.. But otherwise all major decisions are to be made by the Governors wherever possible. I have not found anything, however, that clearly shows this is the policy that the Governors have followed. But this appears to be the practice of the Governors. They deal with major items by their own motions, and it seems they expect major items to be brought back to them by the Executive for decision.
So as I read it, the Governors are more like the Board of Directors of a corporation, than like mere shareholders. The CFC Board of Directors ( = Executive ) are more like an “ Executive Committee “ and do the bidding of the Governors.
However, the CFC Executive are " the Board of Directors " legally, and registered as Directors with the Ministry. Nevertheless, anyone would quickly see through that as a sham, and could easily prove that the Governors run the CFC ( or at least are supposed to ). Bylaw # 2 of the CFC makes this clear, as does the practice of the Governors/Executive.
Liability of Governors
If the Governors have these decision-making powers, and exercise them, then can they be liable for negligent exercise of these powers ( or for failure to exercise them )? They are expected by the membership to exercise their powers to the extent that any reasonable person would do. If they don't, can they be liable?
It is true that in normal corporations, the individual directors are generally protected from liability by the outer shell of the corporation. Negligent actions of the corporation may lead to liability of the corporation, but not of the individual directors. And the directors, in my opinion, run the corporation the same as the Governors run the CFC corporation. So generally, I would expect that the Governors are shielded from liability generally, as are directors generally.
But there has been a broadening of the liability of Directors in recent years, beyond simply actions of illegality. This is why some corporations have now made it a practice to have Directors’ Liability Insurance. It would be good for the CFC to be sure that they do not need such insurance for the Executive/Governors ( I understand that Les Bunning, a pro bono lawyer for CFC, has advised CFC it doesn’t need it )..
Provincial/Territorial Naming of Governors
Based on CFC membership numbers, each Province/Territory is granted a certain number of governor seats based on CFC members, and there are named Governors-at-large. Here is the Governor structure and breakdown for 2008-9:
1. Governors-at-Large :
A - Executive - 2 - President and Past President
B - Representative of Chess Foundation of Canada, and, Canadian Correspondence Chess Association - 2
C - Canadian Champion and Runner-Up - 2
D – Former CFC Presidents ( some Life Governors ) – 10 ( more than the votes of the other Governors-at-Large )
Total – 16
( Note–
a) the other Executive Officers remain representatives of their province;
b) 3 Non-Executive Officers - Rating Auditor, Masters' Representative and Women's Coordinator - are not governors;
c) in 2009-10 there was one less governor at large, since the Past President position was vacant. )
2. Provincial/Territorial Governors:
A - B.C. - 5
B - Alta. - 5
C - Sask. - 1
D - Man. - 2
E - Ont. - 17
F - Que. - 2
G - N.B. - 2
H - P.E.I. - 1
I - N.S. - 2
J - Nfld. & Lab. - 1
K - no reps from the 3 territories ( 3 vacancies )
Total - 38 ( and three vacancies )
( Note: in 2009-10 there were 40 provincial representative governors [ and Ontario had an extra one by mistake ] ).
3. Total No. of Governors - 54 ( and 3 vacancies )
( Note: 55 governors for 2009-10, and one extra by mistake )
( continued in Part II below )
The Governor plays a key role in the CFC. Below is an article I wrote on March 16, 2009 , which is still relevant, that speaks to these elections ( some recent editing has been done to correct a few errors ):
The Important Role of the Governor in the CFC ( Part I )
By Bob Armstrong, CFC Life Member –
Provincial AGM’s & Governors
Each year, usually in mid-Spring, Provinces hold their Annual General Meeting ( AGM ). Members of the CFC have the opportunity at this meeting to elect their governors for the CFC. Is this important to CFC members? Should they come out and vote? Let’s take a look at what role the CFC Governors play, and whether CFC members should be concerned about these upcoming elections.
The Nature of CFC Governors
A pro-bono CFC lawyer stated some time ago, that the Governors ( called “ Special Members “ in the Bylaws ) are similar to corporate shareholders, and not liable for their actions. He stated:
“As a practicing lawyer I can advise that the CFC is a corporation and as such is a separate legal entity. Shareholders of a corporation are not liable for the misdeeds of a corporation. At the annual meeting Governors - who are the equivalent of shareholders- elect an executive to manage the affairs of the corporation in the same way that business corporations elect a board of directors. In the CFC's case the executive are the directors and are registered as such with the appropriate government authority in the same way that a business corporation registers its board of directors with the appropriate government authority. The directors (i.e. the executive in the case of the CFC) of a corporation are occasionally, though not usually, liable unless the acts that they do are themselves unlawful. The directors are not usually personally liable if the corporation takes some action which causes problems or losses to another individual. The corporation may in some circumstances be liable but not the directors personally. This is one of the main reasons why people incorporate. The situation is entirely different with a group of individuals who are not incorporated as is often the case with community groups. “
Differences Of Governors From Shareholders
I, however, see significant differences between the " Special Members = Governors " of the non-profit CFC corporation, and " shareholders " in a normal corporation. Shareholders do not " govern " a corporation. They elect a Board of Directors to govern the corporation for them, and the Board elects an Executive to carry out the day to day running of the enterprise, and to bring matters of governance back to them for their voting decision.
That is not the case in the CFC. Yes the Governors are members of the non-profit, but they are " Special Members ", representing the members in the provinces/territories. And the Bylaws give them powers you don't see being given to shareholders. For example, take Section 1 of CFC Bylaw # 2:
” BY-LAW NUMBER TWO OF THE CHESS FEDERATION OF CANADA
1. ASSEMBLY OF GOVERNORS
The Chess Federation of Canada shall be governed ( my emphasis ) by an Assembly of Governors (hereinafter called the Assembly )... “
This is further emphasized in Section 7:
” 7. POWERS OF THE ASSEMBLY OF GOVERNORS
The Assembly shall have plenary powers ( my emphasis )to exercise in the name of the Federation all powers that the Federation has accorded to it ( my emphasis ) by its Constitution and the Canada Corporations Act (Part II). “
In fact certain critical powers are reserved exclusively to the Governors -
” 8. MATTERS RESERVED EXCLUSIVELY TO THE ASSEMBLY OF GOVERNORS
Final decisions in the following matters are reserved exclusively ( my emphasis ) to the Assembly.
the formal recognition as an affiliate of any provincial association or interim provincial association in Canada,
the appointment of an honourary patron and one or more presidents emeriti from time to time,
the determination of the amount of fees for any class of membership as provided in these by-laws,
the amending in any degree of the Constitution and By-Laws of the Federation,
the election or removal of a Director(s) or Officer(s), unless otherwise provided for in the by-laws,
the changing of the titles, duties and responsibilities of the directors and officers,
the spending, transferring or otherwise disposing of a significant portion of the Federation’s assets,
the appointment or removal of an auditor or auditors. “
The CFC “ Board of Directors “
Furthermore, the Board of Directors of the CFC ( = the Executive ) is the creature of the Governors. It is elected by the Governors. Its powers come from the Governors. And it does not “ govern “ the corporation as a Board of Directors does in a regular corporation. It is more like the Assembly of Governors’ Executive Committee. See Section 9 -
” 9. DELEGATION OF POWERS
The Assembly may delegate any of its powers to the Board of Directors, or to the President or other person or persons. Where a power is delegated to the Board of Directors the Board may in turn delegate such power to the President or other member of the Board of Directors and such delegation shall be deemed to have been made by the Assembly. “
It is my understanding that the Governors have only delegated to the Board of Directors the day-to-day operations of the CFC, and not all powers. Policy decisions and major operating decisions that are urgent, where there is no time to convene ( however ) the Governors to vote, are also delegated to the Executive.. But otherwise all major decisions are to be made by the Governors wherever possible. I have not found anything, however, that clearly shows this is the policy that the Governors have followed. But this appears to be the practice of the Governors. They deal with major items by their own motions, and it seems they expect major items to be brought back to them by the Executive for decision.
So as I read it, the Governors are more like the Board of Directors of a corporation, than like mere shareholders. The CFC Board of Directors ( = Executive ) are more like an “ Executive Committee “ and do the bidding of the Governors.
However, the CFC Executive are " the Board of Directors " legally, and registered as Directors with the Ministry. Nevertheless, anyone would quickly see through that as a sham, and could easily prove that the Governors run the CFC ( or at least are supposed to ). Bylaw # 2 of the CFC makes this clear, as does the practice of the Governors/Executive.
Liability of Governors
If the Governors have these decision-making powers, and exercise them, then can they be liable for negligent exercise of these powers ( or for failure to exercise them )? They are expected by the membership to exercise their powers to the extent that any reasonable person would do. If they don't, can they be liable?
It is true that in normal corporations, the individual directors are generally protected from liability by the outer shell of the corporation. Negligent actions of the corporation may lead to liability of the corporation, but not of the individual directors. And the directors, in my opinion, run the corporation the same as the Governors run the CFC corporation. So generally, I would expect that the Governors are shielded from liability generally, as are directors generally.
But there has been a broadening of the liability of Directors in recent years, beyond simply actions of illegality. This is why some corporations have now made it a practice to have Directors’ Liability Insurance. It would be good for the CFC to be sure that they do not need such insurance for the Executive/Governors ( I understand that Les Bunning, a pro bono lawyer for CFC, has advised CFC it doesn’t need it )..
Provincial/Territorial Naming of Governors
Based on CFC membership numbers, each Province/Territory is granted a certain number of governor seats based on CFC members, and there are named Governors-at-large. Here is the Governor structure and breakdown for 2008-9:
1. Governors-at-Large :
A - Executive - 2 - President and Past President
B - Representative of Chess Foundation of Canada, and, Canadian Correspondence Chess Association - 2
C - Canadian Champion and Runner-Up - 2
D – Former CFC Presidents ( some Life Governors ) – 10 ( more than the votes of the other Governors-at-Large )
Total – 16
( Note–
a) the other Executive Officers remain representatives of their province;
b) 3 Non-Executive Officers - Rating Auditor, Masters' Representative and Women's Coordinator - are not governors;
c) in 2009-10 there was one less governor at large, since the Past President position was vacant. )
2. Provincial/Territorial Governors:
A - B.C. - 5
B - Alta. - 5
C - Sask. - 1
D - Man. - 2
E - Ont. - 17
F - Que. - 2
G - N.B. - 2
H - P.E.I. - 1
I - N.S. - 2
J - Nfld. & Lab. - 1
K - no reps from the 3 territories ( 3 vacancies )
Total - 38 ( and three vacancies )
( Note: in 2009-10 there were 40 provincial representative governors [ and Ontario had an extra one by mistake ] ).
3. Total No. of Governors - 54 ( and 3 vacancies )
( Note: 55 governors for 2009-10, and one extra by mistake )
( continued in Part II below )